Actress Toni Collette sued after property deal sours

HOLLYWOOD actress Toni Collette is starring in her own legal drama after her plans to climb Sydney's luxury property ladder soured.

The Academy Award nominee and her musician husband have been sued for $1.6 million by the couple behind hip menswear brand Industrie.

According to documents filed in the Supreme Court, Collette and her husband of nine years David Galafassi signed a contract to buy a Paddington terrace house from Susan and Nick Kelly on September 30 last year.

They allegedly agreed to pay $6.35 million for the five-bedroom home, putting down a $317,500 deposit and agreeing to settle by December. But the couple pulled out of the deal when they couldn't find a buyer for their Bronte home.

Collette's lawyer, David Carr from Yellow Brick Road lawyers, told the Kellys' lawyer in an email on New Year's Eve last year his clients intended "not to proceed" with the purchase.

Collette, 40, sent an email to Nick Kelly on February 24, telling him the couple had decided to buy another house in Bronte.

Two months later the Kellys sued in an attempt to force them to complete the sale. A week after the lawsuit was lodged, the Kellys' lawyer sent the couple a "notice of termination" of the contract and immediately sold to accountant Ian Ball for $5.5 million. The Kellys now live in a $15.5 million Vaucluse mansion.

The couple have sued Collette and Galafassi for $1.6 million, mostly for the fall in value of the property when they sold to Mr Ball. Their damages suit includes a claim to keep the $317,500 deposit and be paid the $850,000 difference in asking price as well as $43,516 in state land tax and interest for four months.

Collette and Galafassi argue the Kellys sold the terrace under value to Mr Ball and could have sold for $6.25 million at auction.

They claim they do not have to pay land tax or interest on the $6.35 million as there was no agreement to "complete the sale" by December 30. They claim emails sent to the Kellys cannot be used because they were sent "without prejudice".